Filing taxes is nobody’s idea of a good time.
With tax day approaching in the United States, it’s time to examine a question that has bedeviled taxpayers for years: why is the Internal Revenue Service (IRS) customer experience so complex, and what can be done about it?
We’ve all heard the stories, and most of us have experienced the hazards, of dealing with America’s tax-collecting agency. It can take hours to complete a tax return, and if you need help, you can’t get through to Customer Service or you have to wait on hold forever.
Even if you do reach a live agent, the tax code is so complicated you might not understand agent’s answer.
Tax preparers can be as frustrated as the public. As recently as last year, difficulties in getting through to the IRS combined with massive backlogs of unprocessed returns was prompting what some called a “primal howl” from professionals.
What The IRS Is Doing About Filing Taxes
Even the IRS agrees, to a degree. The agency last year established its first-ever Taxpayer Experience Office, designed to “improve taxpayer service” through steps such as expanded callbacks and increased payment options.
It only took 160 years – the IRS dates literally to the Civil War.
Now, the U.S. Department of the Treasury, which houses the IRS, is vowing that a “transformed IRS will provide world-class customer service,” using tens of billions of dollars provided by last year’s Inflation Reduction Act.
Yet while elements of the planned improvements are useful, such as increased use of technology, it appears heavily dependent on hiring a cascade of new agents. Recently, the IRS said it plans to hire nearly 20,000 new employees over the next two years, on top of the 5,000 new taxpayer services staff it brought on in recent months to answer phones and process returns.
Why More Customer Service Agents Isn’t The Answer
To customer experience professionals, pouring money into customer service call centers is essentially putting a Band-Aid on the real problem. Though well-intentioned, the officials crafting these plans are not fully seeing the vital distinction between customer service and customer experience.
As Chris Zane, founder and CEO of Zane’s Cycles, famously said in 2011 (and quoted in my book, The Experience Maker): “customer service starts when the customer experience fails.” He could not be more right.
The IRS shouldn’t need to hire so many new agents. Instead, the agency should be attempting to fix the root cause of its issues, using a customer experience lens.
That means focusing on fixing some of the problems that lead people to call customer service in the first place, such as an overly complicated and cumbersome system and poor communication that confuses already burdened taxpayers.
It could also draw on lessons from private sector experts, such as Amazon, whose six “customer service tenets” are a model for positively engaging with customers, even when there’s a problem.
Filing Taxes Shouldn’t Be So Difficult
A bevy of data backs up the widespread perception that Americans are not happy about both the IRS and the tax code in general.
A recent report from Pew Research Center shows that 53 percent of Americans say the tax system’s complexity bothers them a lot (up from 47% in 2021), while 32 percent say the complexity bothers them some.
That means 85 percent of Americans are displeased in some way with how complicated it is to prepare and file their taxes.
As for the IRS specifically, only 11 percent of people who called the IRS in fiscal year 2021 reached a customer service representative, according to the National Taxpayer Advocate in a blog post headlined: “Hello, is Anyone There?”
And the most recent American Consumer Satisfaction Index measuring citizen satisfaction with government ranked the Treasury Department last of 10 Federal agencies it covered. The index’s research director said in an interview that the results reflect “mostly people that have experienced the IRS.”
How Can IRS Customer Experience Be Improved?
The Taxpayer Advocate post identified “two primary strategies” to improve what it called IRS customer service: hire more customer service agents and employ technology.
There’s no question that better technology is essential. Just being able to automatically match up most workers’ income – which is already reported to the IRS by their employers – would reduce or eliminate a lot of repetitive tasks.
In fact, Vox reported last year that “over 60 million Americans have taxes so simple the IRS could do them automatically.” That’s more than a third of all tax returns filed that would instantly no longer require any customer service agents, be guaranteed to be accurate, and ensure taxpayers are taking advantage of all tax credits available to them.
The technology is there; the IRS just has to leverage it.
Reducing Taxpayer Effort
It comes down to a cornerstone of customer experience, which is reducing customer effort. According to the Harvard Business Review, it’s the single most important factor in determining a customer’s loyalty. So it’s probably a good place to start for the IRS.
The IRS doesn’t make things easy for taxpayers – it tends to make them put in more effort rather than less. And volumes have been written about how the tax code itself is so complicated that many people of all income levels have no realistic chance of doing their taxes alone. Good for the tax preparation industry, but not so good for the average taxpayer.
While this isn’t a political blog, any customer experience expert would agree that the tax code needs to be simplified. Imagine a law that says everyone’s taxes must be filed on a single sheet of paper (or single computer screen) with no attachments. No cheating by using super-small fonts, either! The resulting decisions about combining or eliminating line items would absolutely simplify the process.
And here’s another benefit: It would almost assuredly result in more people actually filing their taxes, and doing so on time. From customer surveys to credit card applications, fewer questions almost always results in a better completion rate.
Using Simpler Language
Another critical customer experience priority is avoiding jargon and using language that customers actually understand. Think the IRS does that? Try reading a Form 1040.
There are 25 lines dedicated to parsing out various sources of income, and six of them require the taxpayer to read a separate set of instructions before entering a figure. There’s also a ton of math required, which most consumers do not like.
And while the myriad form numbers and schedule letters probably make sense to someone in the depths of government bureaucracy, they are clearly hard to understand and keep track of for the average taxpayer.
Just like with other complex industries like financial services and healthcare, the IRS should review all of its communications to eliminate acronyms and other jargon, and either define or eliminate terms that an average eighth grader wouldn’t understand.
What’s Next For Filing Taxes
For the two-thirds of Americans whose returns may not be able to be automated just yet, filing taxes will still never be fun (though I’d like to see the IRS trying to be Witty once in a while!).
But filing taxes also shouldn’t be as difficult as is it today.
Start by simplifying the process, and maybe they won’t have to hire so many customer service agents after all.